Senate Advances GENIUS Act 66-32 for Cryptocurrency Regulation

The U.S. Senate has taken a significant step towards regulating the cryptocurrency sector with the passage of a motion to advance the GENIUS Act. The vote, which took place on the night of May 20, saw 66 senators in favor and 32 against, marking a pivotal moment in the legislative process. This procedural success allows the Senate to officially begin debating and amending the bill, which aims to establish a regulatory framework for digital assets, particularly stablecoins.

One of the most notable aspects of the vote was the reversal of stance by more than 15 Democratic senators. Prominent figures such as Catherine Cortez Masto, Adam Schiff, Mark Warner, Ruben Gallego, and Raphael Warnock, who initially opposed the GENIUS Act, changed their votes to support its advancement. This shift in support highlights the growing bipartisan consensus on the need for regulatory clarity in the cryptocurrency market. Senate Minority Leader Chuck Schumer maintained his opposition, while Senator Josh Hawley was notably absent from the vote.

The GENIUS Act, if passed, would impose comprehensive requirements on stablecoin issuers. These include mandatory reserve backing with assets such as U.S. Treasury securities or cash equivalents, public transparency around reserve composition, and regular audits by independent third parties. The legislation is seen as a response to the failures of algorithmic stablecoins like TerraUSD in 2022, which caused significant turmoil in the global cryptocurrency markets. By establishing clear regulations, the GENIUS Act aims to enhance the stability and credibility of stablecoins, potentially attracting more institutional investors and reducing systemic risks.

While the GENIUS Act has garnered support from industry advocates, it has also raised concerns about the involvement of major political figures and tech giants. There are questions about the financial ties between political figures from both the Trump and Biden administrations and companies involved in digital payment infrastructure. Some lawmakers worry that without strong ethical boundaries, crypto-related policy could favor well-connected insiders. Additionally, there is skepticism regarding the permissibility of technology companies like Meta or Block issuing their own stablecoins without explicit federal regulation. These issues echo previous disputes, such as Meta’s discontinued Diem (Libra) initiative, which raised concerns about currency sovereignty and systemic risks.

The crypto industry has responded to the Senate's vote with cautious optimism. While the GENIUS Act has not yet become law, clearing this procedural hurdle is seen as a positive sign that U.S. lawmakers are moving towards concrete digital asset regulation. Josh Vlasto, spokesperson for CIFonX, stated that this action clears the path for Congress to create clear rules for digital assets, which is a mandate from voters. As the law moves towards debate, market participants will closely monitor any changes that could affect decentralized finance (DeFi), consumer privacy, and custody rules. The GENIUS Act, with its bipartisan support, could be a turning point for cryptocurrency legislation in the U.S., influencing investor trust, innovation, and compliance for years to come.